IASbaba’s Daily Current Affairs – 28th Aug 2017

NATIONAL

TOPIC:

General Studies 2

Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes; mechanisms, laws, institutions and bodies constituted for the protection and betterment of these vulnerable sections

Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.

General Studies 3

Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Puzzling State of Rural Economy

Introduction:

The state of India’s rural economy is puzzling. There is enough evidence to support two opposing statements: One, that the rural economy has improved; and, two, that the rural economy is in the doldrums. On the one hand, some indicators are positive- The unemployment rate has been falling while rural wages have been rising. On the other hand, instances of rural distress are rife and rural consumer sentiment has weakened. There has been a surge of demands for farm loan waivers. Four states have already announced waivers worth about 0.5% of national gross domestic product (GDP). Four more are threatening to do the same.

What triggered the distress?

The large fall in food prices and the resulting shift in the terms of trade (the cost of producing food versus the income derived) to the detriment of rural India triggered the distress.

Short lived cause (such as demonetization and goods and services tax related uncertainties).

Long term cause: lack of structural improvements in food distribution.

Solving the puzzling state of rural economy:

About 70% of rural households own less than a hectare of land. (Let’s call them landless).

The landless rural population has a negative income-consumption gap, which basically means that its income is hardly enough to cover its consumption requirements.

Those who have more than one-hectare land are more indebted as a group than the landless. They also use more formal sector sources of credit than the landless.

A majority of the income for the landless comes from wages while that of the landed from cultivation.

What explains the puzzling state?

After a two-year drought, the good monsoon rains in 2016 increased the demand for labour. As a result, real wages have risen gradually and the unemployment rate has fallen in tandem. This has largely benefited the landless, given that the majority of their income is from wages.

In contrast, the landed, who pay these wages and depend more directly on income from cultivation, have borne the brunt of falling food prices, as what they have received from selling farm produce has been lower than expected.

Real indebtedness for this group has been growing at a faster clip than real incomes since FY14, which explains the growing clamor for bank farm loan waivers.

The fact that the landed and landless are not yet moving in the same direction is throwing up confusing signals about the health of the rural economy.

Farm loan waivers- More harm than good:

They spoil the credit culture, making formal finance more nervous about serving rural India. They also erode macro-economic stability.

In particular, a rapid rise in farm loan waiver expenses could bind India’s states in a vicious cycle, increasing their interest bill or lowering the quality of their spending, or both.

and, if they do, waivers could rise to 0.75% of GDP, endangering a hard-won reduction in debt and deficit ratios.

Way ahead:

Off reforms cannot improve an economy. There needs to be a series of reforms, each supporting the other. One reform should be supported by other.

Example: Inflation-targeting was a welcome reform with distinct economy-wide benefits. But the large fall in inflation that it helped engineer has hurt the indebted by increasing “real” indebtedness, i.e. debt relative to inflation. What is needed now is another spate of reforms to help those who have been hurt.

Agricultural reforms, such as in irrigation and warehousing infrastructure, can help increase farm productivity and therefore incomes. They will not just help fund consumption expenditure, but will leave extra funds in the hands of rural India, which can then be used to service the higher real debt bill.

Conclusion:

Rural distress is a recurring theme in India. Every few years, farm loan waivers or a good monsoon provide some short-lived respite. Clearly, the benefits from neither are sustainable. The panacea for rural distress can only be reforms that will help raise farm productivity and incomes.

Connecting the dots:

Rural economy is in a puzzling state. While on one hand unemployment rate has been falling and on the other instances of rural distress leading to demand for farm loan waivers is on rise. Discuss the reasons behind.

The panacea for rural distress can only be reforms that will help raise farm productivity and incomes. Critically analyze.

NATIONAL

TOPIC:

General Studies 1

Social empowerment

General Studies 2

Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes

Understanding the rise of Dera Sacha Sauda sect:

In news:

The Dera Sacha Sauda sect headed by Gurmeet Ram Rahim Singh is a fascinating phenomenon which cannot be analysed through the standard upper middle-class lens that dismisses it as a criminal or law and order problem.

Cause of concern:

The demographic emergence of millennial ashrams is a source of concern and curiosity. How do these ashrams, which deal with small-town meaning and modernity, appear and become global phenomena? How do they acquire so much freedom so as to become parallel communities which challenge the official? How long have they been beyond the scrutiny of law and order forces? How could so many of them assemble arsenal? It is almost as though these ashrams are enclaves of secession, of groups which have diffused their life and lifestyles as different from the mainstream.

What leads to rise of such sects?

Lack of public service delivery:

The spirituality related to Baba Gurmeet Ram Rahim is just a front for something very real and very positive that the dera offers to its followers. Dignity, social support, medical help, and food security. These are precisely the things that the modern Indian state — at least in its Haryana/Punjab version — refuses to offer to the people.

These sects cater to the diversity of livelihoods in a way that social workers cannot match.

Democracy and modernisation have not delivered equality. The lower castes, the Other Backward Classes needed an imagination beyond the aridity of socialism and Marxism, the promises of equality that offer little.

Dysfunctional system:

It took fifteen years to decide upon a rape charge. This is an indicator of a dysfunctional state system marked by a dysfunctional system of justice. The Law Ministry (2016) tells us that this is to be expected given that there are only 18 judges per million population, while the Law Commission (1987) had recommended a minimum of 50 judges per million. This makes hard-pressed people reach out to deras and babas and panchayats to provide them a semblance of justice since the state refuses to improve its systems of delivery.

To make matters worse, the foot soldiers of justice, the police, over-worked, understaffed, and politically compromised, simply do not have the capabilities to ensure that the authority of the state is asserted routinely, regularly, justly and without rancour.

The leaders of the society are also complicit with the rioters — like Haryana Education Minister Ram Bilas Sharma, who explained on the record, that “Section 144 cannot be imposed on faith”.

Unpreparedness and ineffective handling:

In allowing tens of thousands of followers of the Dera Sacha Sauda sect to gather for a show of strength when their leader, Gurmeet Ram Rahim Singh, was awaiting a judicial verdict in a rape case, the Haryana government abdicated its responsibility of maintaining law and order, and protecting life and property. Prohibitory orders were not enforced, with the government evidently viewing the looming protests as pressure relief valves instead of as trigger points for violence.

In the absence of preventive detention where appropriate, and of restriction on movement and assembly in public spaces, matters spiralled out of control once the court pronounced the cult leader guilty of rape.

The government failed to foresee violence on such a large scale, and no viable security plan was in place until after several hours of lawlessness. Despite intelligence inputs about the Dera followers storing fuel, and knives and stones, the government machinery was woefully slow to react.

Religious sects such as the Dera Sacha Sauda that command a huge following are often handled with kid gloves by governments as they can deliver votes in blocks. Clearly, godmen and cult leaders believe they are above the law. It is for the government and law enforcement agencies to disabuse them of that notion, especially when, as in the case of Gurmeet Ram Rahim Singh, they face charges of rape and murder.

Way ahead:

We have to go beyond the knee-jerk celebrations and dismissals. The old notion of civil society of the secular NGO, the idea of public does not quite fit our democracies today. Our biggest NGOs are religious groups, which are often little multinationals in terms of the power they wield. Dismissing these groups as bad faith will not do.

Connecting the dots:

Rising of sects like Dera Sacha Sauda sect headed by self-proclaimed Godman Gurmeet Ram Rahim Singh is a cause of worry for democratic and secular nation like India. Discuss.

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